Sen. Josh Hawley is likely to support his party’s domestic policy megabill — the inaptly named One Big Beautiful Bill Act — but the Missouri Republican has made clear that he’s looking to make some changes. In fact, more so than most GOP senators, Hawley has focused on Medicaid’s provider tax and its potential impact on rural hospitals.
With this in mind, the senator told The New York Times this week that he’d spoken to Donald Trump about the Senate version of the reconciliation package and, according to Hawley, the president was surprised to learn about the policy that would likely lead to lower payments to rural hospitals.
This was no small revelation. Republicans have been working on this legislation for eight months. It’s been pending in the Senate for several weeks. Trump has been unsubtle in his efforts to lobby lawmakers in support of the far-right package.
But amid considerable discussion in policy circles about a key element of the bill, Trump apparently had no idea about this provision — which, given his background as a post-policy president with little interest in the substance of governing, isn’t surprising, though it was a timely reminder that Trump probably won’t be taking on an active role in ironing out policy details in the coming days and weeks.
That said, it’s not too late for the White House to get up to speed on the issue.
This gets quite wonky, but under the existing system, Medicaid is a federal-state partnership, with states covering upfront care costs, and the federal government then reimbursing them for at least 50%. Nearly every state — in fact, every state except Alaska — has been able to collect additional matching funds through Medicaid provider taxes, which are imposed on providers, including hospitals. As NBC News reported, “When states use provider funds to boost their Medicaid spending, the federal government gives them more money because it’s required to match it.”
In recent decades, hospitals haven’t minded the provider taxes, because the money goes to states, which get reimbursed by the federal government, which insures that money then flows back to the providers. Indeed, a lot of the money raised by way of provider taxes has gone toward bolstering rural hospitals specifically. As Senate Republicans take steps to roll back the practice, it puts those hospitals in real jeopardy. The New York Times reported:
Cutting provider taxes would probably mean funding shortfalls of hundreds of billions of dollars for states over the next decade, leaving them with budget holes to fill. To offset the losses, states would most likely need to explore cutting other services or raising other taxes. In scaling back Medicaid provider taxes, Senate Republicans are pursuing cuts that their House colleagues were hesitant to propose.
Rick Pollack, the American Hospital Association’s president, warned this week that hospitals may have to cut services or even close as a result of this change.
What’s more, it’s not just hospitals that have to worry. The Bulwark’s Jonathan Cohn explained, “There’s a solid argument for addressing these provider taxes, which states use as a budgeting gimmick to draw down extra federal funds. But doing so in the context of a bill that’s cutting Medicaid in so many other ways—and without plowing the savings back into health care — would mean even less access to medical care and more financial vulnerability for low-income Americans.”
With all of this in mind, Hawley told the Times that the Senate version of the bill “needs a lot of work.” Watch this space.








